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The U.S. has said it did not pay any blood money to secure the release of its national Raymond Davis, a suspected CIA contractor who was arrested in Pakistan for gunning down two men, amid reports that a USD 2.3 million compensation deal was reached with the victims’ kin.

“Mr Davis was an embassy employee, and we will continue to seek visas for embassy employees who have important functions to perform in furtherance of the work we are doing with the Pakistani Government and on behalf of the Pakistani people,” Secretary of State Hillary Clinton told reporters accompanying her during her Egypt visit.

She said the U.S. did not pay any compensation to the victims’ families in Pakistan to secure the release of Mr. Davis.

Her comments came in the wake of reports in the Pakistani media that Mr. Davis was acquitted and freed by a court in Lahore after the families of the dead men agreed to a “blood money” deal of USD 2.3 million.

Ms. Clinton, however, said the families of the two men shot dead by 36—year—old Mr. Davis on January 27 pardoned him and added that the U.S. was very grateful for their decision.

“We appreciate the actions that they took that enabled Mr Davis to leave Pakistan and head back home. We also have a Department of Justice investigation that has begun into what happened in Lahore,” she said.

The U.S. has communicated its strong support for the relationship between Pakistan and the United States, which the Obama administration considers to be of strategic importance, and is looking forward to continuing to strengthen it based on mutual respect and common interests.

White House Press Secretary Jay Carney told reporters separately that the U.S. welcomed the release of Mr. Davis.

“The U.S. welcomes the release of Mr Davis. He was pardoned, as you understand it, by the families involved of the victims and in accordance with Pakistani law,” he said.

Mr. Davis’ release ended one of the most serious diplomatic stand—offs between Islamabad and Washington in nine years of partnering in the fight against terrorism.

“This was a very important and necessary step for both of our countries to be able to maintain our relationship and remain focused on progress on bedrock national interests, and I’m deeply grateful for the Pakistani government’s decision,” said Senator John Kerry, Chairman of the powerful Senate Foreign Relations Committee.

Mr. Kerry, who visited Pakistan last month, said the U.S. deeply regrets the loss of life that led to this difficulty in US—Pak relationship and the demonstrations on Pakistan’s streets.

“But neither country could afford for this tragedy to derail our vital relationship. We look forward to working with Pakistan to strengthen our relationship and confront our common challenges,” he said.